Housing affordability solutions
Our plan to make it so all Canadians can afford a suitable home.

Our Goal: All Canadians Can Afford a Good Home by 2030 

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Establishing a home will always take hard work and sacrifice. But for too many Canadians it’s starting to feel impossible. In many places, housing costs have grown out of reach and out of control.

In response, the Canada Mortgage and Housing Corporation (CMHC) has adopted a goal that “By 2030, everyone in Canada has a home that they can afford and that meets their needs” as renters or owners. This means a home in your chosen community with total shelter costs less than 30% of your household’s pre-tax income, enough bedrooms for everyone and in an adequate state of repair.

This is the right goal. It balances ambition with specificity.  It has the credibility of being associated with Canada’s national housing agency.  And it is easy to quantify and measure.  We can track progress via ‘core housing need’ data reported by Statistics Canada (though supplementation with other metrics is warranted). As of 2018, 1 in 10 Canadian households were in core housing need.  The independent Parliamentary Budget Officer forecasts that 1.8 million Canadians will be in core housing need by the middle of this decade. 

Achieving the goal will be very difficult. But, it’s doable.

Big thanks to the Balanced Supply of Housing Community-University collaboration for helping to co-create this strategic framework and the visualization.

Here's how we solve Canada's housing crisis

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Table of contents  

 

Guiding principles


To solve any complex problem you have to get the first principles right. If you don't, the system will continue to lean in the direction of the problem, no matter how hard you try to fix individual pieces. Here are three principles we think are necessary to fix the complex problem of housing unaffordability:

ADEQUATE HOUSING IS A HUMAN RIGHT

The concept that all people have rights to which they are inherently entitled simply because they are a human being allows us to defend against the worst tendencies of our political, social and economic systems.

One of the basic human rights is the right to adequate housing and shelter, recognized in the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and in Canada’s own legislated National Housing Strategy.

This right will have different meanings in different contexts, such that its definition and achievement is an ongoing process. Fundamentally, it means that if we’re capable of offering access to adequate housing and shelter to everyone in Canada, then we do. It also requires us to address the many kinds of discrimination that exist in our housing system, and to include marginalized voices in decision-making.

To realize this right, we need to pick other first principles that lean the entire housing system towards its achievement. And that’s where the next two principles come in.

HOMES FIRST, INVESTMENTS SECOND

One of the root causes of housing unaffordability is the so-called “financialization” or “commodification” of housing.

Making money on housing by building or improving it, or by operating well-maintained rental suites at fair rents is normally a good thing, because it helps people secure a home.

Things become overly “commodified” when the mere ownership of homes and land is treated as an investment strategy — with the aim being to gain wealth (beyond principal payments) without really doing anything at all.

This kind of commodification (a.k.a. speculation) leads to institutional and individual expectations or dependencies on a type of profit that often comes at the direct expense of others’ ability to find and afford a good home.

This guiding principle calls us to treat housing more as a place to call home, and less as a way to get rich, and can be applied to every category of action in this solution framework.

MAKE ROOM FOR EVERYONE

This means all housing policy should be created with the intent of welcoming a diversity of people, incomes, quality housing forms, and tenures into all of our neighbourhoods and communities.

It is a response to existing housing policies (e.g. zoning regimes), practices and attitudes that drive urban sprawl and intentionally or unintentionally, partially or wholly, and proactively or reactively have the effect of excluding groups of people (inc. renters, people of colour, low and middle income people, immigrants, and families) from living in quality housing near desired jobs, amenities
and family.

This guiding principle can be applied to every category of action in this framework. In some cases the application is direct (e.g. dialing up supply) and in other cases indirect (e.g. any action that lowers costs can have the effect of making room).


Our basic plan 

LOWER HOUSING COSTS TO MATCH INCOMES

Affordability can be restored through some combination of higher incomes and lower costs. In many Canadian communities, housing costs have risen so sharply that it’s unrealistic to expect many peoples’ incomes to catch up.

So, while this plan includes opportunities for direct and indirect income support (e.g. renters’ benefits, lower income taxes), its major focus is on reining in housing costs.*

A major area of debate is whether non-market housing, rental housing, and hybrid-tenure housing (e.g. fractional ownership) can realistically and sustainably ensure affordability for all even in a context of stratospheric home and land values.

This basic plan assumes that they cannot (or that it would be extremely difficult), and that some decline in home and land values is required to achieve and sustain the goal.

*We also need to rein in other costs such as child care, parental leave and transportation costs, which themselves can add up to mortgage or rent-sized payments. 

Three pillar plan to solve the housing crisis

PILLAR 1 - SCALE UP NON-MARKET HOUSING

Non-market housing is housing protected from market forces, meaning more affordable rents and prices over the long-term. It makes up a small fraction of Canadian homes, much of it built many decades ago and in need of repairs.

We need to protect, repair, and build more non-market housing to serve a range of incomes and needs and to guarantee affordability on a more permanent basis, backed by large government investments.

This includes both shelters, transitional and social housing to serve the most vulnerable, and a full array of rental and ownership options delivered via public, non-profit or price-regulated private ownership models to serve a broad cross-section of society.

The ability to scale up non-market housing is impacted by conditions in the regular market like land and construction costs, and even massive new investments in non-market housing would leave most Canadians reliant on private options. This is why scaling up non- market housing and fixing the regular market go hand in hand.

Policy Categories - Pillar 1

Under this first pillar are 3 policy categories for scaling up non-market housing:

POLICY CATEGORY 1: PROTECT & UPGRADE EXISTING NON-MARKET HOMES

The first priority must be to ensure that existing non- market housing is maintained by investing in necessary repairs, including accessibility and climate upgrades.

For example, Canada’s National Housing Strategy is currently aiming to repair and upgrade 240,000 community and affordable housing units through the National Housing Co-Investment Fund.

Remaining repair backlogs need to be identified and addressed.

 

POLICY CATEGORY 2: CREATE NEW NON-MARKET HOMES

Widespread trends of worsening affordability in the regular market make it increasingly important to create new non-market homes for Canadians.

This will require large and ongoing investments by all levels of government in the form of donated land, loans, and capital, as well as “inclusionary zoning” provisions that require a certain number of non-market homes be included in market developments (often in exchange for increased density), and incentives and programs to convert existing market housing to non-market tenure.

The entire spectrum of non-market housing needs to be expanded including shelters, transitional and social housing, and a full array of rental and ownership options for low and middle income earners.

Housing co-ops, land trusts, municipal and nonprofit housing corporations are all examples of non-market housing, as are private market homes with covenants or other mechanisms guaranteeing a degree of long-term affordability.

Affordability guarantees can range from strong (e.g. where costs are tied to incomes or inflation) to less strong (e.g. where costs float at some percentage below market value).

 

POLICY CATEGORY 3: CREATE STRATEGIES TO SERVE THE MOST VULNERABLE

Safe, adequate and affordable housing is crucial for protecting the health and well being of vulnerable individuals and families including women and children fleeing domestic violence, seniors, young adults, Indigenous peoples, homeless people, people with disabilities, those dealing with mental health and addiction issues, veterans, racialized groups, and newcomers.

However, housing services are often only as good as the wrap-around services that are also there to support them, including addiction and mental health supports, assisted living and physical supports, language and cultural supports, employment supports, protections against violence, etc.

Creating specific, integrated housing and support strategies for and with vulnerable populations will ensure the best outcomes for these groups and make the most of every housing dollar spent.

When there isn’t enough dedicated non-market and affordable housing to meet the need, income supports such as rental assistance and renters’ benefits need to be expanded to fill the gap.

 

PILLAR 2: FIX THE REGULAR MARKET

The regular market generally means all of the housing in Canada that’s privately owned by a person or for-profit company, with rent and ownership prices set by the market.

We know the regular market is broken because housing costs have broadly skyrocketed while local incomes have remained relatively flat, and because a range of specific market failures have been thoroughly described (e.g. excessive demand, insufficient and/or inappropriate supply, etc.).

All markets are managed by governments in one way or the other, and with approximately 19 of every 20 Canadians relying on the regular market to find housing, it’s clear that failures in the regular market must be addressed.

We can work to fix the regular market by dialing down harmful demand, dialing up and upgrading the right kind of supply, and dialing up protections for renters and rental housing.

Adjusting these dials won’t guarantee affordability or make the most expensive neighbourhoods available to everyone, but we can use them to push the market’s creative energies in the right direction.

Policy categories - Pillar 2

POLICY CATEGORY 1: DIAL DOWN HARMFUL DEMAND

One of the ways the regular housing market can fail is when we allow harmful types of demand to push up prices.

Harmful demand can come in the form of too many people buying housing for purposes other than a home, and it can come from too much money pouring into the system from low interest rates, loose mortgage regulations, foreign capital, home buyer subsidies and other sources.

For example, every year tens of thousands of potential homes across Canada are left empty as speculative or cash-holding properties, or used for commercial short- term rentals, flipping, or money laundering.

Meanwhile, banks and households are caught in a bubble/feedback loop of ever-larger mortgages fueled by low interest rates, rising prices and other factors.

Governments can dial down harmful demand by restricting global capital flows into local real estate, eliminating hidden ownership, cracking down on excessive speculation, “flipping,” money laundering and fraud, taxing empty homes, regulating short-term rentals, revisiting homeowner subsidies, tightening how mortgage lending is regulated, insured, and incentivized compared to more productive non-mortgage lending, and revising how housing costs factor into official inflation statistics.

 

POLICY CATEGORY 2: DIAL UP AND UPGRADE THE RIGHT SUPPLY

One of the ways the regular market can fail is by providing too much of the ‘wrong’ (problematic) kinds of supply, for example:

  • ‘Tall and Sprawl’ patterns that force a choice between an overabundance of small condos not suitable for families, or long polluting commutes
  • ‘Mansionification’ where it’s easier to get approval to build giant mansions than much-needed multiplexes
  • New construction in places with limited livability or jobs
  • New construction that destroys existing affordability
  • Overabundance of condos over purpose-built rentals

‘Right supply’ means building homes that – in location, form, tenure and price – better suit the needs of existing and aspiring residents.

Governments can dial up the right supply by first rigorously assessing housing needs, then opening up low-density and discriminatory zoning for a diversity of people, families, forms and tenures (inc. lots of rentals), streamlining associated approvals, incentivizing and/or mandating affordability, climate upgrades, integrated practices and collaborative project delivery (to make the development process more efficient and cost-effective), all while protecting existing low- income housing and capturing land value uplift.

Provincial and federal incentives can be provided to make all of this happen faster.

 

POLICY CATEGORY 3: DIAL UP PROTECTIONS FOR RENTERS AND RENTAL HOUSING

One of the ways the regular housing market can fail is when it incentivizes or enables the destruction of existing affordable rental housing.

This can happen when buildings deteriorate to the point of being uninhabitable, and on the flip side when there’s excessive incentive to demolish or renovate older buildings in the quest for higher rents. In either case, renters are displaced and sometimes subject to mistreatment including improper evictions, discrimination, price gouging and even intimidation.

For example, Canada lost an estimated 322,600 affordable apartments (monthly rents <$750) between 2011 and 2016 due to demolition or rent increases, far outstripping e.g. Canada’s commitment to build 150,000 new affordable units over 10 years.

Governments can protect existing affordable rentals by helping nonprofits purchase buildings that are for sale, mandating their replacement upon redevelopment (e.g. via higher density), with rent controls (e.g. counterbalanced with rental construction incentives), and with direct income support to help fill the gap.

Tenant protection and assistance policies can be designed to protect renters from mistreatment and to minimize the impacts of displacement, without unduly burdening landlords, or making it too expensive for developers to build new rental units.

PILLAR 3: BREAK THE ADDICTION TO HIGH HOME VALUES **This is an area on which Gen Squeeze is focusing particular attention.

Unless Canadians’ incomes drastically increase, it will be extremely difficult to achieve and maintain the goal (everyone able to afford a home that meets their needs) in a context of high and rising home values.

The problem is that past and current policy has encouraged treating home and land ownership as an investment and retirement strategy, with many households now expecting or depending on home value increases for their financial security and wealth.

Canada’s overall economy is also problematically dependent on ever-rising home values and the additional consumer spending, GDP increases, and investment returns this creates.

Altogether, Canada has become addicted to an unsustainable housing system (a.k.a. housing bubble), and we need to figure out ways to break the addiction.

This can include policy that helps Canadians gain wealth outside of homeownership, rebalances taxation of income vs. real estate windfalls, and protects those households that would be made vulnerable if the bubble bursts/prices drop.

Policy categories - Pillar 3

POLICY CATEGORY 1: HELP CANADIANS EARN $ ON OTHER THINGS

So long as property ownership is seen by many Canadians as their safest and best investment option, they’ll put an outsized proportion of their available funds (savings and debt) into it.

This behaviour makes homeowners overly dependent on high and rising home values, draws capital away from more productive economic activity and pushes the market higher, which then reinforces the behaviour further.

To break this pattern, Canada’s governments can incentivize households to put more of their retirement and other savings into non-housing investments.

This can include making housing investments less lucrative (e.g. through higher taxes; see next category), non-housing investments more lucrative (e.g. through tax breaks), and non-housing investments more accessible. This category can also include strengthened public pensions, and new public investment vehicles that help achieve desirable community and social impacts.

 

POLICY CATEGORY 2: LOWER TAXES ON INCOME, INCREASE ON REAL ESTATE WINDFALLS

One reason Canada is addicted to high home values is the relatively low taxation of residential property wealth.

For example, while every dollar of labour income is taxed (subject to deductions), only 50% of capital gains on secondary residences are taxed, and capital gains on principal residences are tax-free.

Canadian jurisdictions also apply modest levels of annual property taxation by comparison with taxation on income and capital gains.

This kind of tax sheltering is easier to justify when home values track closer to inflation, but in the current context of runaway gains it serves to draw capital away from more productive economic activity, inflates demand and average costs, contributes to inequalities and unaffordability, and makes homeowners increasingly dependent on high and rising values.

To address this, Canadian governments can lower taxes on income and raise taxes on property wealth in a number of ways, ranging from higher annual property taxation to deferrable surtaxes or capital gains taxes, being mindful of trickle-down impacts on tenants.

 

POLICY CATEGORY 3: CUSHION THE IMPACTS OF A PRICE DROP

One of the biggest challenges with persistently overheated housing markets (a.k.a. bubbles) is that if the bubble bursts and prices go down, many households and the economy writ large would take a hit.

However, if we think home values need to drop in order to achieve affordability for everyone, then we need policies to protect people against the impacts.

This is a relatively uncharted area of policy and would benefit from a detailed mapping of risks, differentiating between those who would be disadvantaged by a drop in prices and those who would be made truly vulnerable.

Policies could range from debt relief or ownership takeovers/tenure transitions, to strengthened social programs that decrease Canadians’ current and future reliance on home equity to provide for basic needs.

Such policies would need to be carefully designed so as to not encourage even greater risk-taking.

 


Additional requirements

In addition to this three-pillar plan, there are two more requirements to ensure affordability.

REFORM HOUSING GOVERNANCE

To ensure that everyone in Canada can afford a home that meets their needs. Indigenous, federal, provincial, territorial, and municipal governments need to work together.

Intergovernmental collaboration can be difficult at the best of times, and the governments who are closest to the housing issue (local and indigenous governments) often have the least resources and authority to address it.

Many would say the value of housing investments by federal, provincial and territorial governments is still inadequate, often with too much red tape in the way of accessing it.

One way to reform housing governance would be to increase the amount of provincial and especially federal funds dedicated to the issue. Another way would be to rethink the current division of powers such that local and indigenous governments have more direct authority and resources to achieve the goal in locally-tailored ways.

 

COLLECT MORE AND BETTER DATA

While there are ongoing efforts to improve the amount of housing data collected, synthesized and shared between governments and the public, some feel there are still too many gatekeepers, and large data gaps, making it difficult to make evidence-based decisions.

Additional efforts should include a federal beneficial ownership registry, robust information on global capital flows into Canadian residential real estate, robust data about the influence of monetary policy, the mortgage market and lending on rising home prices, better information on evictions, housing discrimination and equity, secondary rental market, rigorous assessments of local housing needs, and more.

 

Key lenses

LENS: RECONCILIATION

All housing policy should be viewed through a reconciliation lens.

That is:

  • Do the housing policies or strategies in question exacerbate or help redress the colonization of indigenous peoples in Canada? For example, do they seek to flow real estate-derived wealth back to indigenous communities on whose traditional and/or unceded lands that wealth was created?
  • Do they seek to identify and redress housing-related infringements of rights?
  • Do they include dedicated and well-resourced urban indigenous housing strategies and cultural housing options?
  • Do they include the necessary resources and/or desired self-governing powers to help indigenous governments solve housing issues in long-lasting and locally-tailored ways?

 

LENS: ECONOMY

All housing policy should be viewed through an economic lens.

That is:

  • Do the housing policies or strategies in question help strengthen or weaken Canada’s economy?

This lens immediately triggers different views on what is or isn’t healthy economic activity when it comes to housing.

For example, this framework’s second guiding principle of “Homes First, Investments Second”, the “Basic Plan” that focuses on reining in costs, and the third policy pillar of “Break the addiction to high home values” contains an embedded critique of Canada’s current degree of economic reliance on rising home and land values.

Housing should be central to any government’s economic strategy. Rather than focus on spurring ever- higher values, the focus should be on the productivity gains and the avoided social costs created by ensuring everyone has an affordable home that meets their needs. It is time to imagine an economy that is stimulated by a housing system which reconnects the cost of living to local earnings in order to support employment and growth in other industries.

This is especially true as Canada seeks to recover from the Covid-19 pandemic, which has disproportionately impacted those least likely to have stable housing at the outset.

 

LENS: INEQUALITY

All housing policy should be viewed through an inequality lens.

That is:

  • Do the policies or strategies in question exacerbate or reduce housing-related inequalities, both in terms of access and wealth?
  • When it comes to access, do they seek to increase the number and quality of available and affordable housing options for a diversity of residents?
  • Do they seek to eliminate barriers related to discrimination based on race, class, age, gender, sexuality, physical abilities, tenure type and other factors?
  • When it comes to wealth, do they seek to decrease the massive wealth inequalities – between renters and owners, between and within age groups, etc. – that have been driven by housing in Canada and around the world?

 

LENS: HEALTH

All housing policy should be viewed through a health lens.

That is:

  • Do the policies or strategies in question improve or harm individual, family and community health and well being?
  • Do they acknowledge the critical importance of good, stable housing to health? Conversely, do they acknowledge the significant health-related costs of inadequate or unaffordable housing and displacement?
  • Do they support the use of healthy building materials and/or remediation and upgrades?
  • Do they acknowledge that for some people, housing services are only as good as the wrap-around services that are there to support them including mental health and addictions support, language and cultural supports, protection against violence, etc.?

 

LENS: LIVABILITY

All housing policy should be viewed through a livability lens.

That is:

  • Do the policies or strategies in question promote not only an affordable, suitable physical dwelling, but a livable and vibrant neighbourhood, community and lifestyle?
  • Do they encourage and enable people to live in walkable neighbourhoods close to jobs and amenities, or do they push people further and further out?
  • Do they integrate active and public transportation infrastructure and local economic development?
  • Do they foster relationships between neighbours and welcome a diversity of people and families, or do they promote homogeneity and isolation?

 

LENS: ENVIRONMENT

All housing policy should be viewed through an environmental lens.

That is:

  • Do the policies or strategies in question promote environmental stewardship, reduce greenhouse gases, and limit other forms of pollution, waste and toxic substances?
  • Do they lean towards encouraging more sprawl, or compact development?
  • Before housing is built on brownfield sites, have those sites been assessed for alternative use as restored wildlife conservation areas (e.g. former waterfront-facing industrial locations)?
  • Do they acknowledge and address increased environmental risks from climate change such as floods, sea-level rise, wildfire hazards and landslides?
  • Do they encourage the reuse of materials and limit waste and toxic substances?
  • Do they acknowledge the potential negative impacts of environmental regulations and environmentally-focused development patterns on affordability? For example, do they preserve limited-access green spaces (e.g. golf courses) at the expense of those needing housing?

Acknowledgements

This strategic framework was co-created with the Balanced Supply of Housing Community-University collaboration.

The starting place was a policy framework originally developed by Generation Squeeze, which is a partner in the collaboration. The initial framework was itself based on several years of housing research, advocacy, and multi-stakeholder dialogues. This starting framework combined a simple summary diagram with explanatory text.

Through a series of twenty in-depth interviews conducted in 2020 with members and partners in the collaboration, we gathered feedback and insights that were used to improve and upgrade the starting framework.

The idea was not to create a perfect framework that enjoys 100% consensus, but to develop an increasingly strong “living” product that does a reasonable job of uniting different perspectives and areas of focus.The intention is to make regular improvements to the framework over time, incorporating more and more perspectives, and new information. It is anticipated the policy framework will be revisited annually
as part of the collaboration's team-building activities, and as a strategy to synthesize findings from the various research projects funded by the collaboration.


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